Recognition of provisional goodwill: Real need or communication strategy?

Roncagliolo, Elisa; Avallone, Francesco

doi:10.1016/j.intaccaudtax.2022.100510

Cited by 1 publication

(1 citation statement)

References 79 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Building on this literature, the current study examines the value relevance of impairment losses in half-yearly reports. Several studies investigated the determinants of goodwill impairment losses (Beatty and Weber, 2006; Hayn and Hughes, 2006; Roychowdhury and Watts, 2007; Li et al , 2011; Ramanna and Watts, 2012; Glaum et al , 2018; Harper and Sun, 2019; Gros and Koch, 2020; Li and Ouyang, 2021) and demonstrated the use of opportunistic behavior in goodwill (Roncagliolo and Avallone, 2022) and impairment test (Avallone and Quagli, 2015; Giner and Pardo, 2015). In this regard, the specific half-yearly context provides different incentives for managers that cannot be found in the annual context.…”

Section: Literature Review and Hypotheses Developmentmentioning

confidence: 99%

The information content of half-yearly goodwill impairment losses: analysis of the European context

Roncagliolo

2023

IJAIM

Self Cite

View full text Add to dashboard Cite

Purpose This study aims to contribute to the debate on goodwill accounting by examining the information content of impairment losses recognized in half-yearly reports. Half-yearly reports provide a suitable context to examine the effectiveness of the impairment process. Due to IFRIC 10 requirements, indeed, managers may have incentives to avoid recognizing impairment losses at the interim reporting date. Design/methodology/approach The study adopts an archival approach. Based on the traditional Ohlson’s model (1995), it explores the information content of half-yearly impairment losses in the European context over the period 2007–2017. Findings Findings confirm the relevance of half-yearly reports and suggest that half-yearly impairment losses are significantly associated with stock prices. In particular, investors positively value companies that recognized goodwill impairment losses at the interim reporting date. Research limitations/implications The study contributes to the academic debate on goodwill and the effectiveness of the impairment procedure. In particular, it provides empirical evidence on the recognition of goodwill write-offs when it is possible to avoid the impairment test in the absence of indications of impairment. Practical implications Findings of this study can support the current debate on accounting for goodwill also in the light of the recent proposals of the IASB on the need to improve the effectiveness of the impairment test. Originality/value This study provides original empirical evidence on the goodwill impairment test in half-yearly reports, extending previous research that typically examines this issue in annual reports.

show abstract